Median A/E firm operating profit margins on net revenue (before incentive/bonus payments and taxes) have been on a steady rise in recent years, reaching a six-year high of 14.3% this year, according to business consulting firm PSMJ Resources’ 2015 A/E Financial Performance Benchmark Survey Report.
After posting all-time highs in 2007 and remaining stable in 2008, profit margins started to decline significantly beginning in 2009, due to the severe downturn in the economy. But, median profit margins on net revenue have been on the upswing in the past three years, hitting 11.4% and 13.0% in the 2013 and 2014 surveys, respectively—which, along with the 2015 data, supports the notion that backlogs are filling back up.
“It is certainly encouraging to see profit margins trending upward. But, there is another side to this coin. Just because the median has reached 14.3%, that doesn’t mean it should be an acceptable profit margin at all for an A/E firm,” says Frank A. Stasiowski, FAIA, Founder and CEO of PSMJ Resources. “There are plenty of A/E firms that can and do deliver profit margins far higher than this. These are the firm leaders who are able to really think differently—about project delivery, about marketing strategy, about value. Deliver a higher value and you can command higher fees…and yield higher profits.”
With data from 328 A/E firms across the United States and Canada, the 2015 PSMJ A/E Financial Performance Benchmark Survey Report is the go-to industry resource for firms wanting to increase cash flow, lower overhead, and improve overall financial results. Now in its 35th edition, the comprehensive report provides the most valuable research and insight available for making critical decisions that impact the success of a firm.
Related Stories
Market Data | Feb 6, 2023
Nonresidential construction spending dips 0.5% in December 2022
National nonresidential construction spending decreased by 0.5% in December, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $943.5 billion for the month.
Giants 400 | Feb 3, 2023
Top Workplace/Interior Fitout Architecture, Engineering, and Construction Firms for 2022
Gensler, Interior Architects, AECOM, STO Building Group, and CBRE top the ranking of the nation's largest workplace/interior fitout architecture, engineering, and construction firms, as reported in Building Design+Construction's 2022 Giants 400 Report.
Multifamily Housing | Feb 3, 2023
HUD unveils report to help multifamily housing developers overcome barriers to offsite construction
The U.S. Department of Housing and Urban Development, in partnership with the National Institute of Building Sciences and MOD X, has released the Offsite Construction for Housing: Research Roadmap, a strategic report that presents the key knowledge gaps and research needs to overcome the barriers and challenges to offsite construction.
Steel Buildings | Feb 3, 2023
Top 10 structural steel building projects for 2023
A Mies van der Rohe-designed art and architecture school at Indiana University and Morphosis Architects' Orange County Museum of Art in Costa Mesa, Calif., are among 10 projects to win IDEAS² Awards from the American Institute of Steel Construction.
Multifamily Housing | Feb 2, 2023
St. Louis’s first transit-oriented multifamily development opens in historic Skinker DeBaliviere neighborhood
St. Louis’s first major transit-oriented, multi-family development recently opened with 287 apartments available for rent. The $71 million Expo at Forest Park project includes a network of pathways to accommodate many modes of transportation including ride share, the region’s Metro Transit system, a trolley line, pedestrian traffic, automobiles, and bike traffic on the 7-mile St. Vincent Greenway Trail.
Giants 400 | Feb 2, 2023
2022 Convention Center Sector Giants: Top architecture, engineering, and construction firms in the U.S. convention and conference facilities sector
Clark Group, EUA, KPFF, Populous, TVS, and Walter P Moore top BD+C's rankings of the nation's largest convention and conference facilities architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Sports and Recreational Facilities | Feb 1, 2023
University of Houston opens 'game changer' wellness center at downtown campus
The University of Houston-Downtown (UHD) recently opened its new Wellness & Success Center (WSC). The $39 million, 75,000 sf facility greatly improves the quality of the school’s exercise programs and areas dedicated to them. It also establishes a dynamic core and recognizable landmark for fostering and nurturing an on-campus community, according to a news release from SmithGroup, which designed the building along with HarrisonKornberg Architects.
Giants 400 | Feb 1, 2023
2022 Cultural Facilities Giants: Top architecture, engineering, and construction firms in the U.S. cultural facilities sector
Populous, DLR Group, KPFF, Arup, and Turner Construction head BD+C's rankings of the nation's largest cultural facilities sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report. Building types include museums, public libraries, performing arts centers, and concert venues.
Giants 400 | Jan 31, 2023
2022 Retail Giants: Top architecture, engineering, and construction firms in the U.S. retail building sector
Gensler, CallisonRTKL, Kimley-Horn, Henderson Engineers, Whiting-Turner Contracting, and Turner Construction top BD+C's rankings of the nation's largest retail sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.
Giants 400 | Jan 31, 2023
2022 Government Sector Giants: Top architecture, engineering, and construction firms in the U.S. government buildings sector
Gensler, Jacobs, Hensel Phelps, and Page top BD+C's rankings of the nation's largest government sector architecture, engineering, and construction firms, as reported in the 2022 Giants 400 Report.